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The gross market borrowings of the government is expected to be larger for the next fiscal compared with Rs 5.92 lakh crore for the current fiscal as the amount of bond maturities are higher in the next fiscal. Most experts believe that gross market borrowings will be little over Rs 6 lakh crore for FY16 even if the net borrowings are lower compared with the current fiscal.

The FY16 fiscal deficit target has been pegged at 3.6 per cent of Gross Domestic Product (GDP) and fiscal deficit for the current fiscal is estimated at 4.1 per cent of GDP.

"The gross market borrowing may be Rs 6.25 lakh crore. If the government also announces a bond switch programme then the gross borrowing will be higher. Though the fiscal deficit is going to narrow down, the bond maturities are higher. Total bond maturities in the next financial year is Rs 1.76 lakh crore as compared with Rs 1.26 lakh crore in the current fiscal. The net government borrowing will be marginally below this fiscal's borrowing," said Suyash Choudhary, head-fixed income, IDFC Mutual Fund.

According to Choudhary though the fiscal deficit is narrowing but the GDP is higher which is why the net fiscal deficit remains static even though the percentage to GDP is falling.

Today was the last bond auction of the fiscal and the Union budget will be announced later this month. Due to a higher gross market borrowing of the government initially bond yields may climb up, but experts believe the impact of it will be short lived.

"Bond market participants pay more attention to macro-economic factors for interest rate expectations. Government borrowings have not proved to be a reliable indicator for bond yields," said Dhawal Dalal, executive vice-president and head of fixed income at DSP BlackRock Mutual Fund. Dalal expects gross market borrowings of around Rs 6.2 lakh crore for FY16.

Few experts are of the view that the fiscal deficit for the next fiscal may be marginally higher than what is estimated. "We are penciling in around 3.8 per cent of fiscal deficit for FY16. The government may start the infrastructure spending because the private sector do not have the capacity to leverage further. In that case government spending may be little higher. Since growth is not all that strong, tax revenues need not be sufficient to finance all the borrowings," said Badrish Kulhalli, head of fixed income at HDFC Life. He expects gross market borrowing in the range of Rs 6.5 to 6.6 lakh crore for FY16.

After the rate cut of 25 bps by the central bank last month, the street is hoping for further cuts of 50 bps in 2015 which is seen supporting the bond market. The yield on the 10-year benchmark bond ended at 7.70 per cent on Friday compared with previous close of 7.74 per cent.